| Bollinger bands are one of the most effective | | | | volatile prices are and how far away price is from |
| technical indicators you can use and should be | | | | "normal" value. |
| looked at by all traders. | | | | Most volatile price movements are short term |
| Bollinger bands are simple to understand simple to | | | | and are caused as much by trader psychology |
| apply and best of all they can really enhance your | | | | and the influence of greed and fear. |
| profit potential, so let's look at them. | | | | Trading with this in mind Bollinger bands are a |
| Bollinger bands will show you how to do the | | | | very useful in the following scenarios. |
| following. | | | | 1. Spotting New Trend Trends |
| Predict big trending moves | | | | When a market makes trades in a narrow range, |
| Spot trend reversals | | | | the Bollinger bands be narrow and close to the |
| Time trading positions with greater accuracy. | | | | central moving average this indicates a market |
| They are a visual indicator so you may like to | | | | with low volatility. |
| profit this out and look at some of the free chart | | | | This can be a warning that a high volatility |
| services on the net so you can get a better all | | | | trending move is about to start. |
| round view on the power of Bollinger bands and | | | | When prices break above or below the upper or |
| their potential. | | | | lower band, a trend could be about to develop. |
| What are Bollinger Bands? | | | | Traders will then take a position in the direction of |
| Bollinger bands are volatility bands drawn around a | | | | the trend. |
| simple moving average in the centre giving you | | | | 2. Timing Entry Levels For Multiple Positions |
| three lines to look at. | | | | We all hat missing the original trend however |
| Bollinger bands are calculated using the standard | | | | Bollinger bands can help you get in the trend with |
| deviation of price over the same period as | | | | good risk to reward on a pullback. |
| moving averages and plotted as lines above and | | | | Simply look for dips toward the centre band and |
| below the moving average. | | | | enter in the direction of the trend. |
| Moving averages are used to identify the | | | | 3. Market Turning points |
| underlying trend. | | | | When the price touch the top of the Bollinger |
| Bollinger bands combine this moving average with | | | | band and stall a return to the middle band is likely |
| the volatility of the individual market known as | | | | and a sell is generated. |
| standard deviation of price to create a trading | | | | If the price touches the bottom of the Bollinger |
| envelope. | | | | band and momentum does not follow through you |
| The distance between upper and lower Bollinger | | | | do the reverse and buy. |
| bands shows the volatility of the market. The | | | | Bollinger bands are a great indicator but like all |
| further away the upper and lower bands are the | | | | technical indicators they don't work all the time by |
| more volatile price is. | | | | themselves and you need to incorporate other |
| Why Bollinger Bands Work | | | | indicators as filters. |
| In any market, the value of the instrument | | | | To get a better picture and to weed out false |
| traded tends to rise slowly over the longer term. | | | | signals use basic chart analysis with momentum |
| Prices may become volatile in the short term, but | | | | indicators such as stochastics, RSI or ADX. |
| will normally come back to the longer term | | | | Bollinger bands are excellent as they reflect areas |
| moving average (the centre band) | | | | of value for timing trade entries and also warn of |
| The centre band represents "normal" value. | | | | trending moves and are an indicator any trader |
| The volatility of the outer bands shows how | | | | should consider to help boost their profit potential. |